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241  Bitcoin / Bitcoin Discussion / Re: Independance debate in Scotland and UK on: February 01, 2014, 11:57:30 PM
Just to be clear from the outset, the problems with transaction fees
will be several orders of magnitude smaller than the challenges that
two Scottish banks, particularly the RBS will bring.

As a suggestion, Scotland should have its own cryptocurrency.
That, plus bitcoin, the Euro and GBP should be legal tender, and
used as reserve currency.

The reasons for having a separate cryptocurrency are:
a) if you don't you could end up like Greece, unable to adjust your
exchange rate, or adjust monetary policy to deal with stresses
in the economy.
b) you can default. I'd suggest building default into the cryptocurrency
some 50 years in the future. More on that later.

As for the question of transaction fees, it costs Euro 380,000 to
process a block at present, and costs are likely to increase in the
future if bitcoin keeps rising in price. Hence if 1000 transactions are
processed, each heavily subsidised transaction would cost Euro 380
in electricity, which someone has to pay for. So, it makes sense to
keep a local cryptocurrency.

You might also want to adjust expectations for things like Intellectual
Property, and other monopolies, by limiting the extent of external
ownership at some time in the future - say in 50 years time.

You asked what a bitcoin economy might look like. Probably a lot like
one based on gold or silver, with similar problems. There's a thread
on Learning form Imperial Rome if you want to delve deeper. 

242  Economy / Economics / Re: Learning from Imperial Rome on: February 01, 2014, 11:31:18 PM
Thaaanos - thanks for the advice.

I knew that the things I was proposing would be difficult to sell,
hence if the readers show little interest in the content, there would be no
point in setting out the implications for say, NewYork, or, for example

243  Economy / Economics / Re: Learning from Imperial Rome on: January 25, 2014, 10:51:18 PM
Today's financial world requires an entirely different train of thought to
that of ancient economic systems. I will therfore begin at the very beginning, - because
I do not want as yet, to see how deep the rabbit hole goes - with this from p55 of
the  translation by Robert Francis Harper of the Code of Hammaurabi dated 2250BC.

CoH#111 "If a wine-seller give 60KA of drink on credit, ... at the time of harvest
she shall receive 50KA of grain"

Note four things: that debt and credit were created; that for all intents and purposes
measures of grain were money; that the transaction was regulated by law; and that
hard currency is significantly absent from the law.

(To help you collect this train of thought, try telling the barman at your local watering
hole that your right to drink on credit is enshrined in law ;-))

A further observation: if grain is money, the supply of money will vary from year
to year, but the supply, with some qualifications, will be a fixed amount.

Before moving on, ... the footnote from CoH p50 reas as follows (see earlier post)
"five columns #66-99 have been cut off the stone"

I'd suppose that the relevance of that depends on your view of the probability
and predictability of a financial crash in ancient Babylon. If crises were frequent
enough to be anticipated, they would have written provisions into their law.

What would happen to an economy with no ability to grow its money supply if it had
fixed rates of interest and no real-world limits to growth?

Suppose their population grows at 0.5 percent each year; productivity increases by
2.5 percent each year; money is lent at ten percent interest and seven percent
interest is paid on deposits.

More and more goods are produced, money is restricted, hence the price of goods and
wages falls. Debt does not fall, because the additional goods produced merely makes up
the difference between borrowing and lending interest payments. After 50 years, the
economy weakens, and after sixty years it collapses. At that time, each interest payment
on the debt would be near equivalent to the original purchasing power of the loan.

I cannot pretend that this is a real example, or that it is even approximates the
modern financial system. It is however, close enough to suggest that an economy based
on bitcoin would not provide a long term solution to financial instability without
additional measures being taken. I will attempt to put this another way: If Imperial
Rome had bitcoin, a collapse was still unavoidable. Growth would have been lower,
interest rates would be lower, increasing debt and hyperinflation would be a more
probable route for collapse, and it may have taken longer, but the outcome would be

In all this, recall that the sun still shines, crops still grow, and life goes on.
And ask, is it really necessary that civilisations of a certain age suffer something
that seems equivalent to a heart attack in people at the top of their profession?
244  Economy / Economics / Re: Learning from Imperial Rome on: January 21, 2014, 11:07:05 PM
BitDreams - thanks for the links - I was unaware that someone had made the connection between
interest rates and the Kondratiev long wave. There may also be a causal relationship
between Debt and generational change, the "Fourth Turning" etc, but there is enough
basic math to work on here without invoking either metaphysics or religion ;-)

Found on that link:
"Obviously, with a date for universal debt forgiveness written in stone, no lender would ever set terms for repayment PAST the Jubilee year."
But see this :
"The laws (numbered from 1 to 282 but numbers 13, 66-99, 110 and 111 are missing) are on an 8 foot tall stela of black diorite"
Not as easy as wiping a hard disc, but stone yields to a hammer and chisel eventually ;-)
It does make you curious about laws 66-99, No?

Seriously though, attempts to subvert and evade a Debt Jubilee are a certainty in any Age.

Elsewhere on that link a graphs show "interest" at 10 percent and seven percent "growth",
suggested that such an economic system could not continue indefinitely.
Stated that way, I'd suggest the proposition is misleading, though not incorrect, and if I may,
I will direct my reply as best I can toward the economy of Imperial Rome.
The census figures suggest that the Roman population grew by a little over 0.5 percent per year,
and based on best guesses, productivity grew similarly, giving growth in the economy of a little
over one percent per year in most periods.
I had a look at the effect of increasing productivity in an economy with 0.5 percent population
growth and fixed rates of interest of 10 and seven percent - all figure approximate,
using a variant of Keen's Minsky model. The results were unexpected and intriguing, - I don't know
how long it will take to get my head around these dynamics. [ Some of the results are pure
vanilla - see Dr Grasselli's and Prof Keen's papers and video, the other results, ...  too early to tell. ]

245  Economy / Economics / Re: Learning from Imperial Rome on: January 18, 2014, 10:31:55 PM

The easy question first: The summary and opinion are mine, as are any mistakes in
calculation or transcription. I've tried to provide links to source material
where possible, so if something is not clearly linked, wikipedia is the likely source.
I'd add that I am approaching this as a not particlularly bright Engineer, who happens
to have an interest in economics and history.

I'd add this to earlier comments:
a) All systems fail eventually, good design provides for graceful failure.
b) Ancient civilisations placed limitations on interest rates, including prohibition of usury
to make their civilisation more robust.
c) To get over the problem of unpayable debt, debt forgiveness was written into Law, and
sometimes applied by edict. Slaves were set free. (Graeber defines freedom as freedom from debt)
d) Arguably, Imperial Rome failed to follow ancient practice, thus their trimetallic system
became debased because of too much debt, leading to hyperinflation and collapse.

Note that prohibition of usury was commonplace prior to the late middle ages:
See Tiberius for an instance during the Imperial Roman period, and Christian Rulers
adopted the practice for many years - currently sharia law has a similar prohibition.

I've gained the impression that some have placed their faith in gold and bitcoin
to remain viable if or when the system collapses. I have to admit I have some of these
myself, but if the System goes down, putting sticking plasters (band-aids) on a torn
artery is not a solution. I have suggested designing a suitable alt-coin as a way
forward, but for various reasons, I doubt it will work.

One point in bitcoin's favour is that this population is somewhat familiar with
exponential change.
246  Economy / Economics / Re: Learning from Imperial Rome on: January 09, 2014, 11:10:50 PM
"How about restarting blocsoldiers every 49 years, or better yet have older blocks phase out gradually as , wouldnt that create a rolling reboot of the economy."

The economy would need to be in a dire state before enough people agreed to such a measure,
and, as pointed out elsewhere, property would likely have to be returned as part of the deal.
While I'm hopeful that I'm wrong and the global economy rights itself, history suggests that
some form of radical solution may be required, not immediately, but eventually. 

While Bitcoin may bring a new paradigm to banking, and make dishonesty more difficult, it will
not alter debt. At best, Gresham's law will apply, bitcoins will be hoarded, driven out by fiat

The simplest proposal is for the new cryptocurrency to wipe out its entire blockchain and restart.
247  Economy / Economics / Re: Learning from Imperial Rome on: January 08, 2014, 08:17:42 AM
No questions on a cryptocurrency that goes to zero?
248  Economy / Economics / Re: Learning from Imperial Rome on: January 08, 2014, 08:16:00 AM

"if Rome entered a phase of austerity instead would that extend or shorten the life of the empire?"

Austerity??? For example, selling your wife to the highest bidder in the local
slavemarket and buying a smaller one? I'm not sure that would work ;-)

In 27BC over half the inhabitants of Rome were slaves, and by the mid 300AD's
the elite were passing laws prohibiting freemen from selling themselves, and
presumably their wives and children, into slavery. Does that sound like
austerity to you?

Can you show some graphs with legionaire salary index with wheat and gold? Prodromidis - Discussion paper Nr 85 - Another View on an Old Inflation - P-I Prodromidis
Try p27?

Was there any kind of fractional reserve banking at some point in Rome?
It was a cash society. And I think you need paper money to make
fractional reserve lending work.
249  Economy / Economics / Re: Learning from Imperial Rome on: January 04, 2014, 11:37:10 PM
cp1 - thanks for your comment and the references - I will look.
250  Economy / Economics / Re: Learning from Imperial Rome on: January 04, 2014, 11:26:22 PM

Disclosure and Errata

Aurelian - "wages were probably much less"

I would encourage others to model the Roman economy using Prof Keen's Minsky model,
and to then use that to validate any results. An early basic model is here :
Sourceforge has the latest version of the "Minsky" program.

There is a gap in the figures for legionary pay in the table given by Prodromidis,
with the figure for Maximinus Thrax (235-238AD) in the range 1200-1800 denarii.
The next figures quoted are for Diocletian (284-305AD) 7500-12400 denarii.
The price of wheat, and hence subsistence wages, disconnects from army pay in this
period. The chosen path in the model is for army pay to increase at a relatively
steady pace, while wages and price inflation suffer a step change around 274AD.
Price inflation in 270AD is estimated at x6 prices in 27BC.

Thus the results you get may (or may not) show wages in the private sector rising much
less than those in the Army, eg these increases to 270AD may be x8 and x40 respectively.
Though there may be an explanation for the difference, this still bothers me - see also
"Estimates of the slave population in Rome itself range all the way from one in five
to three to one in the period between the conquest of Greece (146 B.c.) and the reign
of Alexander Severus (A.D. 222-235)."

It seems there may be some disagreement on the size of the enslaved Roman population.
That variation alters the average wage - more slaves means lower figures, but without
accurate facts and figures there is no way to determine the change.

It is possible, if unlikely, that the wage calculated by the model is indeed correct.
More work will be needed to include the effect of slavery, and perhaps a change to
the model . . . back to the virtual drawing board :-(

* A correction to the estimated increase in debt stated earlier: the correct figure
is x278 - the increase in the rate of bank lending. Debt increases lagged that
somewhat at x163 (both figures are for 270AD).
251  Economy / Economics / Re: Learning from Imperial Rome on: January 02, 2014, 11:41:06 PM
Learning from Imperial Rome - 27BC to 305AD and beyond

Few people understand how much the world has changed. Not many people can speak of their
experience of the commonplace use of silver coins, let alone a non-decimal currency .
Fewer still understand that the financial world became unhinged in 1971 when the USA
repudiated the link between the world's reserve currency and gold. To understand
Bitcoin's place in the modern monetary system, first understand the difference between
systems using metallic coinage, and the current experiment in fiat currency. If the above
text seems overly long, it does, at minimum, provide an anchor point in a sea of instability.

The link below provides comment on "On the Minting of Coin" by Copernicus in 1517. It
provides a useful summary of the principles of the metallist system of money. Of note are
the recommendations for the introduction of new coinage: Except for the stricture that
coins should not be issued in large quantities, Bitcoin does not meet these criteria.

Alternatively, the criteria suggests that price of Bitcoin should approximate the cost of
generating one additional coin, if Bitcoin's intrinsic valuation is calculated in the same
way that bullion metals are evaluated, ie that seniorage should be near zero.

Another view on precious metals as money is given in the link below, together with a
reference to Solon (Greece 593BC). 'Athens was saved by Solon, who "shook off" all debt.'
"At the point at which a tyrant or revolt seemed likely, the Athenians appointed Solon to

Under Diocletian the economy had reached a point where barter and payment-in-kind were
part of the State's finances, a clear indication that the monetary system was in a state
of collapse, and that the efficiencies obtained though trimetallic money had dissipated.
Earlier civilisations had concluded that once debts of various kinds had reached a
critical mass the only way to get the economy to recover was to shake off the debt.

Hence, when Diocletian began his reign from 295AD onward:
* GDP was falling
* all debts contracted before 1 September 301AD must be repaid athe price before the Edict
* there was not enough gold and silver available to restore confidence in the currency
* payments in kind led to rampant price inflation
* greed and speculation were blamed, leading to micromanagement of the economy and trade.

History suggests that where there is a currency, there are periodic crises, and that
three outcomes to these kind of crises are probable:
* Revolt or revolution especially if the merely rich feel threated by the elite
* A cyclic recovery led by debt cancellation and the return of property and freedom
* The Roman outcome - a slide into ruin where the power of the elite is unchallenged

A cryptocurrency might have offered Rome a fourth option: a means of automatically
cancelling debt after a set period of time. It was probably too late to implement
such a scheme by the time Diocletian came to power but if it were in place some decades
earlier, the hyperinflation that occurred from 300AD onward might have been averted.

"The price of the same measure of wheat rose in Egypt from 6 drachmai in the first
century to 200 in the third century; in A.D. 314, the price rose to 9,000 drachmai
and to 78,000 in A.D. 334; shortly after the year A.D. 344 the price shot up to more
than 2 million drachmai. As noted, other provinces went through a similar, if not
quite as spectacular, inflation."  Robert L. Scheuttinger and Eamonn Butler 1978.

Explanations other than excessive debt have been proposed for the fall of the Roman
Empire: slavery, indolence, welfare, excessive wage and price controls, excessive
taxation, acts of economic lunacy and even lead poisioning. It would be wise to
consider all the possibilities before reaching a conclusion.

However, if excessive debt leads to another spectacular crash in the world's
interconnected economies, by the time the crisis becomes evident it may be too late
for effective action. I urge everyone interested in cryptocurrencies to carefully
consider the case for inbuilt lifespans as part of their design.
252  Economy / Economics / Re: Learning from Imperial Rome on: January 01, 2014, 11:18:07 PM

It is impossible to adequately cover the events of 285AD-305AD in a brief note: inevitably
the text must focus on one narrow area, however, other writers have brought their own views
and experience to an interesting period in world history. There is no shortage of comment

When Diocletian became Emperor, he may have assumed that, provided he survived past the
two year half-life of his predecessors, the foundations provided by Aurelian merely
needed to be built on and reinforced to ensure the continuity of Rome's greatness.
He had the self-confidence to install himself as both god and Emperor, suggesting
perhaps that he believed this reign would be different. The economy would soon test
the limits of his power.

The economy, was in an especially sorry state. The common coinage had become so debased as
to be virtually worthless, requiring carts on occasion to move wealth from one place to
another. Diocletian's attempt to reissue good gold and silver coins failed because there
simply was not enough gold and silver available to restore confidence in the currency.

A "Maximum Price Edict" issued in 301, intended to curb inflation, served only to drive
goods onto the black market. Diocletian finally accepted the ruin of the money economy
and revised the tax system so that it was based on payments in kind. The soldiers too
came to be paid in kind. This led to rampant price inflation: for example, the price of
wheat under Diocletian was 67 times the typical Principate figure. The monetary economy
collapsed and the army was obliged to rely on unpaid food levies to obtain supplies.

Food levies were raised without regard to fairness, ruining the border provinces where
the military was mainly based. Soldiers' salaries became worthless, which reduced the
army's recruits to a subsistence-level existence. One figure suggested is that one artaba
of corn, or wheat, rose to the price of 120,000 drachmae, 20 Talents, presumably prior to
the edict on prices.

Among other things, prices were set for transportation, and that alone may have helped
collapse the economy. Aurelian's attempt to reform the currency had failed; the denarius
was dead. Diocletian restored the three-metal coinage and issued better quality pieces.
The new system consisted of five coins: the aureus/solidus, a gold coin weighing, like
its predecessors, one-sixtieth of a pound; the argenteus, a coin weighing one ninety-sixth
of a pound and containing ninety-five percent pure silver; the follis, sometimes referred
to as the laureatus A, which is a copper coin with added silver struck at the rate of
thirty-two to the pound; the radiatus, a small copper coin struck at the rate of 108 to
the pound, with no added silver; and a coin known today as the laureatus B, a smaller
copper coin struck at the rate of 192 to the pound. Since the nominal values of these
new issues were lower than their intrinsic worth as metals, the state was minting these
coins at a loss. This practice could be sustained only by requisitioning precious metals
from private citizens in exchange for state-minted coin (of a far lower value than the
price of the precious metals requisitioned).

By 301, however, the system was in trouble, strained by a new bout of inflation. Diocletian
therefore issued his Edict on Coinage, an act re-tariffing all debts so that the nummus,
the most common coin in circulation, would be worth half as much. In the edict, preserved
in an inscription from the city of Aphrodisias in Caria (near Geyre, Turkey), it was
declared that all debts contracted before 1 September 301AD must be repaid at the old
standards, while all debts contracted after that date would be repaid at the new standards.
It appears that the edict was made in an attempt to preserve the current price of gold and
to keep the Empire's coinage on silver, Rome's traditional metal currency. This edict risked
giving further momentum to inflationary trends, as had happened after Aurelian's currency
reforms. The government's response was to issue a price freeze.

The Edict on Maximum Prices (Edictum De Pretiis Rerum Venalium) was issued two to three
months after the coinage edict, somewhere between 20 November and 10 December 301AD. The
best-preserved Latin inscription surviving from the Greek East, the edict survives in many
versions, on materials as varied as wood, papyrus, and stone. In the edict, Diocletian
declared that the current pricing crisis resulted from the unchecked greed of merchants,
and had resulted in turmoil for the mass of common citizens. The language of the edict
calls on the people's memory of their benevolent leaders, and exhorts them to enforce the
provisions of the edict, and thereby restore perfection to the world. The edict goes on to
list in detail over one thousand goods and accompanying retail prices not to be exceeded.
Penalties are laid out for various pricing transgressions.

In the most basic terms, the edict was ignorant of the law of supply and demand: it ignored
the fact that prices might vary from region to region according to product availability, and
it ignored the impact of transportation costs in the retail price of goods. In the judgment
of the historian David Potter, the edict was "an act of economic lunacy". Inflation,
speculation, and monetary instability continued, and a black market arose to trade in goods
forced out of official markets. The edict's penalties were applied unevenly across the empire
(some scholars believe they were applied only in Diocletian's domains), widely resisted,
and eventually dropped, perhaps within a year of the edict's issue. Lactantius has written
of the perverse accompaniments to the edict; of goods withdrawn from the market, of brawls
over minute variations in price, of the deaths that came when its provisions were enforced.
His account may be true, but it seems to modern historians exaggerated and hyperbolic, and
the impact of the law is recorded in no other ancient source.

Prodromidis suggests wheat prices in the range 220-1332 drachmae for 296-301AD and that the
pay of a Legionary was in the range 7500-12400 denarii pa. Add to that a reluctance of the
public to accept the soldier's coin at face value, especially after an Edict doubled the
coin's purchasing power.

Our modern practice of never wasting a good crisis seems to have been applied equally in
Diocletian's reign. His response to instability was to apply ever greater control, and the
above text does not do justice to the extent of imposition on everyday life: religion,
occupation, trade, and travel were all subject to monitoring, scrutiny, intervention and
punishment, including torture and execution.

Given today's obsession with Debt:GDP ratios, Diocletian's methods were counterproductive.
But who will tell a god that he is wrong?

Diocletion retired to grow cabbages in 305AD. The Eastern Empire, based in Constaninople,
survived a thousand years as the the Byzantine Empire. The Western Empire, based in Rome,
crumbled into ruin.


This passage points to the continuing decline:
"Large powerful landowners, able to avoid taxation by legal or illegal means, began to
organise small communities around them. Small landowners crushed into bankruptcy by the
heavy burden of taxation threw themselves at the mercy of the large landowners signing
on as tenants or even as slaves. (slaves, of course, paid no taxes). The latter
phenomenon was so widespread and so injurious to the State's revenues in fact that in
368AD the Emperor Valens declared it illegal to renounce one's liberty in order to place
oneself under the protection of a great landlord. (Bernardi 1970:49)"

253  Economy / Economics / Re: Learning from Imperial Rome on: December 31, 2013, 11:35:14 PM


At the beginning of Aurelian's reign debt was perhaps x1000 times that of Augustus,
while army pay had increased x40, and wages were probably much less. Taxes were still
paid in coin, and while the silver coinage was almost worthless, gold coins seem to have
avoided debasement.

Aurelian was proclaimed emperor in September 270AD by the legions in Sirmium.
From 250AD the economical substrate of the state, agriculture and commerce, suffered from
the disruption caused by the instability. On top of this an epidemic swept through the
Empire around 250AD, greatly diminishing manpower both for the army and for agriculture.
Following several barabarian invasions, Rome itself came close to being sacked.
Aurelian commenced building the walls that became known as the Aurelian Walls around Rome.

As soon as the military situation had been stabilised, Aurelian went to Rome, forcibly
closed down the mint to end the fraud being perpetrated by the mint workers, righted the
disorder and exiled the qualified workers, in particular the engravers, to other imperial
mints. As such, at the beginning of 271AD, the main source of the devalued billon radiates
was under control.

Aurelian's reign records the only uprising of mint workers. The rationalis Felicissimus,
a senior public financial official whose responsibilities included supervision of the mint
at Rome, revolted against Aurelian. The revolt seems to have been caused by the fact that
the mint workers, and Felicissimus first, were accustomed to stealing the silver for the
coins and producing coins of inferior quality. Aurelian wanted to eliminate this, and put
Felicissimus under trial. The rationalis incited the mintworkers to revolt: the rebellion
spread in the streets, even if it seems that Felicissimus was killed immediately, presumably
executed. In the rebellion the mint of Rome was closed temporarily, and the institution of
several other mints caused the main mint of the empire to lose its hegemony.

In 272AD, Aurelian turned his attention to the lost eastern provinces of the empire, the
so-called "Palmyrene Empire" ruled by Queen Zenobia from the city of Palmyra.
Zenobia had carved out her own empire, encompassing Syria, Palestine, Egypt and large
parts of Asia Minor. In response, the Egyptian queen cut off Rome's shipments of grain,
and in a matter of weeks, the Romans started running low on bread.
Eventually Zenobia and her son were captured and made to walk on the streets of Rome
in his triumph.

With the grain stores once again shipped to Rome, Aurelian's soldiers handed out free bread
to the citizens of the city, and the Emperor was hailed a hero by his subjects. The rich
province Egypt was also recovered by Aurelian. The Brucheion (Royal Quarter) in Alexandria
was burned to the ground.

Aurelian attacked the next stage of his reform once he had restored the unity of the Empire.
Thanks to the reconquest of the Gallic empire in 274AD and the ensuing closure of the
Cologne and Trier mints, he was able to cut off the second source of devalued billon and
embark on the actual monetary reform. The western mints of Milan and Rome, which was reopened
in 273AD with this aim, served as a test bench for the reform, and in the spring of 274AD,
the reformed antoninianus, the aurelianus, was introduced in all the mints. The exergue on
the reverse carried the distinctive mark of the reform, XXI/KA
His monetary reformation included in the introduction of antoninianii containing 5\% silver.
They bore the mark XXI (or its Greek numerals form KA), which meant that twenty of such
coins would contain the same silver quantity of an old silver denarius.[26] Considering that
this was an improvement over the previous situation gives an idea of the severity of the
economic situation Aurelian faced. The Emperor struggled to introduce the new "good" coin
by recalling all the old "bad" coins prior to their introduction.
At some time, Prodromidis does not say exactly when, Aurelian abandoned the fixed rate of
converion of the old debased silver coinage to gold coins. "Throughout the long debasement
period, the authorities did not alter the long-standing peg between the new "silver" coins
and gold pieces until it was abandoned by Aurelian (A.D.270-5)".

They showed and guaranteed the fine silver content of the coin (5%): 20 aureliani at 5% of
silver were equivalent to 1 argenteus of pure silver. The mark shows that the reformer
intended to reintroduce the pure silver coin equivalent to the 20 aureliani and weighing
1/80 of the Roman pound into the monetary system. This was undoubtedly to be done as soon
as the bad billon radiates of the crisis had been recalled, which would otherwise have
condemned the new silver coin to hoarding and melting down.
Thus the diffusion of the aurelianus is linked to the recall of the debased coinage,
inevitably the antoniniani of Gallienus, Claudius and Quintillus (and in the west, their
equivalent in the name of Victorinus and Tetricus) since, as the hoards prove, they were
the only currency in circulation. The recall of the debased currency turned out to be all
the more necessary, since keeping them in circulation would have been a source of confusion
in transactions. This meant, therefore, that the face value of the antoninianus and that
of the aurelianus, both radiate coins, were different. If we admit that the value of the
aurelianus at two denarii was maintained, it must be supposed that it was the billon
antoninianus of Gallienus and his successors that was devalued by half, ending up being
worth only one denarius. Furthermore, the denarius usualis which was then introduced
had the physical characteristics, both in weight and in content, of the devalued
antoninianus. It was issued to defuse public mistrust.

Long before the antoninianus reached the final stage of its debasement, its depreciation
had resulted in the dislocation of the entire monetary system because the fractional coins
of the antoninianus had been eliminated. (antoninianus and aurelianus seem to mean the same)
The reformed currency of 274AD and its denominations remained in use until the great
recoinage of Diocletian in 293AD. Aurelian struck a radiate aurelianus of improved weight
(84 to the Roman pound) and fineness (5% fine) that was tariffed at five notational denarii
communes ("common denarii" or d.c.). The denomination carried on the reverse the numerals XXI
(or in Greek KA) to denote the coin as equal to 20 sestertii (or 5 d.c.).
The gold aureus (minted at 50 or 60 the Roman pound) was exhanged at rates of 600 to
1,000 d.c., equivalent to 120 to 200 aurelianiani. Rare fractions of billion denarii,
and of bronze sestertii and asses were also coined. Simultaneously, Aurelian reorganized
the provincial mint at Alexandria, and he minted an improved Alexandrine tetradrachma
that might have been tariffed at par with the aurelianus.

Army Pay: Roman soldiers received top pay for coveted full time employment. The legionary
from 46BC to 84AD received a daily wage of 10 asses or 225 (150?) denarii per year;
Praetorian guardsmen received 2 denarii per day or 720 denarii per year. Domitian
raised legionary annual pay by one-third to 300 denarii. Septimius Severus in 195
and Caracalla in 215AD raised the annual pay to 400 and 600 denarii respectively.
In 274AD Aurelian revised the currency: 800 denarius -> 800 antoninianus :
200 Aurelianus : 10 Argenteus? : 1 Aureus (The Argenteus was never issued)
Under Augustus 1 Aureus = 25 denarius : a debasement of the denarius x8?
Aurelian's wife, Ulpina Severina ruled as Empress for some six months after his death
and issued some coinage as Empress.

Wheat prices : 24 drachmae in 269AD; 200 drachmae in 276AD
That suggests a serious exchange rate devaluation took place as part of Aurelian's
reform. Debts were adjusted to account for the new currency.


(275AD -285AD) Several Emperors - Tacitus, Florianus, Probus, Carus, Carinus

Not much is known about finances during this time, except that price inflation was a
feature. There are some rare coins issued by Tacitus that suggest that a rebasement of
the silver coinage was in progress.

254  Economy / Economics / Re: Learning from Imperial Rome on: December 31, 2013, 06:17:50 AM


During his reign as emperor, Caracalla raised the annual pay of an average
legionary to 675 denarii and lavished many benefits on the army which he both
feared and admired, as instructed by his father Septimius Severus who had told
him on his deathbed to "Be harmonious, enrich the soldiers, and scorn all other men."
With the soldiers, "He forgot even the proper dignity of his rank, encouraging their
insolent familiarity, " according to Gibbon. "The vigour of the army, instead of
being confirmed by the severe discipline of the camps, melted away in the luxury
of the cities." After the assination of Geta, Caracalla soon convinced them of the
justice of his cause, by distributing in one lavish donative the accumulated
treasures of his father's reign.
About the time of his accession he devalued the Roman currency, the silver purity
of the denarius was decreased from 56.5% to 51.5%, the actual silver weight dropping
from 1.81 grams to 1.66 grams - though the overall weight slightly increased.
In 215 he introduced the antoninianus, a "double denarius" weighing 5.1 grams and
containing 2.6 grams of silver - a purity of 52%.
The Constitutio Antoniniana (Latin: "Constitution [or Edict] of Antoninus")
(also called Edict of Caracalla) was an edict issued in 212 by Caracalla which
declared that all free men in the Roman Empire were to be given full Roman citizenship
and all free women in the Empire were given the same rights as Roman women. The Roman
Historian Cassius Dio contended that the sole motivation for the edict was a desire
to increase state revenue. At the time aliens did not have to pay most taxes that
were required of citizens, so although nominally Caracalla was elevating their legal
status, he was more importantly expanding the Roman tax base. The effect of this was
to remove the distinction that citizenship had held since the foundation of Rome and
as such the act had a profound effect upon the fabric of Roman society. He kept the
Senate and other wealthy families in check by forcing them to construct, at their own
expense, palaces, theaters, and places of entertainment throughout the periphery.
New and heavy taxes were levied against the bulk of the population, with additional
fees and confiscations targeted at the wealthiest families. Only Roman citizens paid
an inheritance and manumission tax, and this tax was doubled at this time. Dion
informs us that the extraordinary gifts of Caracalla to the army amounted annually to
seventy millions of drachmae.


Macrinus (217AD-218AD)

Macrinus was Praetorian Guard Prefect when Caracalla was assinated, and became Emperor
while on a military campaign. A working assumption is that he gained control of
33 Legions and raised their pay to 900 denarii pa.

Macrinus achieved a costly draw near the town of Nisibis and as a result was forced to
enter negotiations through which was obliged to pay the enormous indemnity of 200
million sesterces to the Parthian ruler Artabanus IV in return for peace. Macrinus
displayed some financial farsightedness when he revalued the Roman currency. He
increased the silver purity of the denarius from 51.5% to 58% - the actual silver
weight increasing from 1.66 grams to 1.82 grams.
Nevertheless, in order to prevent an uprising among the soldiers, he at once
presented a donative to both the legionaries and the praetorians, rewarding them more
liberally than was customary, and as a man would who sought to mitigate the crime of
having slain the Emperor. The language of Dio is obscure, but he seems to say that
when the name Antoninus was bestowed on Diadumenianus, Macrinus gave each soldier
a second donative of 3000 sesterces, indicating that he had presented the same sum to
them on his accession. Entirely different figures are given in the fictitious speech
in Diad.


Over the next fiftytwo years the fortunes of Rome declined, echoing the purity of the
silver coinage.

The year 238AD saw six Emperors come and go.

Between 255AD and 260AD wheat prices fell from 24 drachmae to 12 drachmae, suggesting
that a financial crisis had occurred.

Around 259AD, Valerian moved to defend Edessa and his troops lost significant numbers
to the plague. In 250 to 266, at the height of the outbreak, 5,000 people a day were
said to be dying in Rome.

From around 255AD conversion from gold to the debased coinage began to break down
progressively, leading to hoarding, confusion and panic that had gradually increased
over the years. Gold coins likely ceased to circulate at the end of the period.

In 269AD the denarius had long since ceased to circulate, and the the antoninianus was
reduced to a copper coin with a silver wash, and a content of two percent silver. These
coins were theoretically convertible to gold at a rate of 25 and 12.5:1, but whether
the moneychangers would accept such exchanges or if they charged an extortionate tariff
is unknown.
255  Economy / Economics / Re: Learning from Imperial Rome on: December 29, 2013, 11:03:12 PM
Marcus Aurelius and Lucius Verus

Marcus Aurelius ruled with Lucius Verus as co-emperor from 161AD until Verus' death
in 169AD. Upon accession, he and Lucius paid a double donative, and he also devalued
the Roman currency. The donative is huge - likely enough to empty the treasury, and to
cause problems with the costs of rebuilding Rome the following year. He decreased the
silver purity of the denarius from 83.5% to 79% the silver weight dropping from
2.68 grams to 2.57 grams. However, Marcus would later revisit the issue of currency
reform. The decision to double the donative implies that there was an expectation,
what was a gift, had become an obligation, to be paid to the Army.

In the spring of 162, the Tiber flooded over its banks, destroying much of Rome.
It drowned many animals, leaving the city in famine. Marcus and Lucius gave the
crisis their personal attention. In other times of famine, the emperors are said
to have provided for the  Italian communities out of the Roman granaries.
That would effectively reduce the Emperor's income.
They were at war with Parthia, 161AD - 166AD. The returning army carried with them
a plague, afterwards known as the Antonine Plague, or the Plague of Galen, which
spread through the Roman Empire between 165AD and 180AD. The disease was a pandemic
believed to be either of smallpox or measles, and would ultimately claim the lives
of two Roman emperors - Lucius Verus, who died in 169AD,  and Marcus Aurelius,
whose family name, Antoninus, was given to the epidemic. The disease broke out again
nine years later, according to the Roman historian Dio Cassius, and caused up to
2,000 deaths a day at Rome, one-quarter of those infected. Total deaths have been
estimated at five million. In 168AD they revalued the denarius, increasing the silver
purity from 79% to 82% - the actual silver weight increasing from 2.57 grams to
2.67 grams. However, two years later Marcus reverted to the previous values because
of the military crises facing the empire. Far more dangerous was the invasion of
166AD, when the Marcomanni of Bohemia, clients of the Roman Empire since 19, crossed
the Danube together with the Lombards and other German tribes. At the same time, the
Iranian Sarmatians attacked between the Danube and the Theiss rivers. The Romans
suffered at least two serious defeats by the Quadi and Marcomanni, who could cross
the Alps, ravage Opitergium (Oderzo) and besiege Aquileia, the main Roman city of
north-east Italy.

At this time the Roman economy is in a critial state: small changes to the
population or to productivity will make disproportionate change to the outcome
of events - the butterfly effect.


Commodus (177AD - 192AD)

Arbitrary, vicious, insane ...

Despite his notoriety, and considering the importance of his reign, Commodus'
years in power are not well chronicled. Commodus was simply uninterested in his
responsibilities and found a new chamberlain and favourite in Cleander. Upon his
accession Commodus devalued the Roman currency. He reduced the weight of the
denarius from 96 per Roman pound to 105 (3.85 grams to 3.35 grams). He also
reduced the silver purity from 79 percent to 76 percent - the silver weight
dropping from 2.57 grams to 2.34 grams. In 186 he further reduced the  purity and
silver weight to 74 percent and 2.22 grams respectively, being 108 to the Roman
pound.  His reduction of the denarius during his rule was the largest since the
empire's first devaluation during Nero's reign. Cleander proceeded to concentrate
power in his own hands and to enrich himself by becoming responsible for all public
offices: he sold and bestowed entry to the Senate, army commands, governorships
and, increasingly, even the suffect consulships to the highest bidder. Unrest
around the empire increased, with large numbers of army deserters causing trouble
in Gaul and Germany. Finally Papirius Dionysius, the grain commissioner, caused
a famine in 190AD so that hungry Romans would destroy Cleandar.

His arrogance knew few bounds as he renamed Rome Commodiana as his colony and
changed the names of the months. He tried to remain popular by giving 140 denarii
to each person, while ordering senators in other cities to contribute five denarii
each and every year on his birthday. For each appearance in the arena as a
gladiator, he charged the city of Rome a million sesterces, straining the Roman

The avaiable data suggests that vast quantities of money were skimmed from the
emperor and the Imperial revenues and caused distortions to the economy.

His personal trainer strangled Commodus in his bath after other conspiracies failed.

Five Emperors (193AD)

After Commodus was assassinated, Laetus and Eclectus took Helvius Pertinax, 66,
to the praetorian camp, where he promised the guards a donative of 12,000 sesterces
During the plot against Commodus, the assassins seem to have settled on the popular
66 year old Senator Pertinax in advance. He was immediately raised as Emperor, and
ressurected the title 'Princeps Senatus' or First of the Senate, in deference to
Republican ideals. He was likely seen as a new Nerva - a respected Senator restoring
the Empire after the murder of a tyrant. Due to insufficient funds in the Imperial
treasury to pay the now expected donative to the army on his succession, his gift
was considerably smaller than they expected. As a result, while he oversaw corn
supplies in Ostia the Praetorian Guard plotted a coup. As Pertinax rushed back to
Rome to defuse the coup, he met with the conspirators face-to-face on the Palatine
and was dispatched there after a reign of less than 3 months.
On  accession the Imperial treasury was reduced to less than a million sesterces.
Pertinax had sold imperial luxuries such as statues, arms, horses, furniture, and
slaves while cutting palace expenditures in half. Oppressive taxes and restrictions
on commerce were canceled. Those improving uncultivated Italian lands were exempted
from tribute for ten years. The praetorians got what they were promised, and the
people received 100 denarii each.
Not getting what he wanted, Laetus incited soldiers, who were no longer allowed to
plunder; after only 86 days on the throne they murdered Emperor Pertinax and his
loyal Eclectus.
City prefect Sulpicianus, father-in-law of Pertinax, aimed to take the throne; but
he was outbid by the wealthy Didius Julianus, who promised the praetorian guards
25,000 sesterces and gave them 30,000 each, saying he would restore the honor of
Commodus. The Senate and people loathed Julianus, because they believed Pertinax
was reforming the abuses of the Commodus era, and many believed the soldiers killed
Pertinax for money.
Pescennius Niger, the Roman governor in Syria, was urged by those in Asia to assume
the throne, and Julianus ordered him killed. Septimius Severus, commanding in Pannonia,
shrewdly sent a letter to Britain governor Clodius Albinus, declaring him Caesar,
and marched for Rome. Julianus got the Senate to declare Severus a public enemy and
fortified the palace, putting to death Laetus and Marcia. Meanwhile Severus not only
won over most of Europe, he even persuaded those sent by Julianus to kill him.
The desperate Julianus tried to share the throne with Severus; but the Senate sentenced
Julianus to death, declared Severus Emperor, and bestowed divine honors on Pertinax.
Julianus was executed in the palace after reigning 66 days.


Severus (193AD-211AD)

Severus was blamed for making Rome turbulent with many non-Italian troops and
excessive expenditures on the army. The civil war with Albinus was won by the army
of Severus at Lugdunum (Lyons), where according to Dio 150,000 from each side
fought. Albinus committed suicide, and the city was sacked and burned in 197AD.
Severus returned to Rome and executed 29 senators who had supported Albinus.
Severus had his son Antoninus (later called Caracalla) confirmed as Caesar.
When Parthian king Vologases besieged Nisibis, Severus launched another campaign
against the Parthians, relieved Nisibis, took Seleucia and Babylon, and plundered
Ctesiphon (enslaving perhaps 100,000); but he failed to capture Hatra. In 199AD
Severus visited Egypt.
In 203AD Severus visited his native Leptis Magna in Africa, promoting municipal
and cultural activities there. Severus returned to Rome to celebrate secular games
the next year, spending a record 200,000,000 sesterces on the people. The coinage
was debased, as the denarius was now less than half silver in order to maintain
his enlarged military.
Upon his accession he decreased the silver purity of the denarius from 81.5% to 78.5%.
However, the silver weight actually increased, rising from 2.40 grams to 2.46 grams.
Nevertheless the following year he debased the denarius substantially because of
rising military expenditures. The silver purity decreased from 78.5% to 64.5% - the
silver weight dropping from 2.46 grams to 1.98 grams. In 196AD he reduced the purity
and silver weight of the denarius again, to 54% and 1.82 grams respectively.
Severus' currency debasement was the largest since the reign of Nero, compromising
the long-term strength of the economy.
He promoted the Antoninianus.  Although nominally valued at two denarii, the
antoninianus never contained more than 1.6 times the amount of silver of the denarius.
As the number of antoniniani minted increased, the number of denarii minted decreased,
until the denarius ceased to be minted in significant quantities by the middle of the
third century.
His policy of an expanded and better-rewarded army was criticized by his contemporary
Dio Cassius and Herodianus: in particular, they pointed out the increasing burden
(in the form of taxes and services) the civilian population had to bear to maintain
the new army. Severus raised army pay from 300 to 500 denarii pa.

On his deathbed, Severus instructed his son Caracalla to always mind the soldiers
and ignore everyone else.

256  Economy / Economics / Re: Learning from Imperial Rome on: December 29, 2013, 06:44:13 AM

He freed many people who had been unjustly imprisoned by Domitian and returned a
great deal of  private property that Domitian had confiscated (a process that
had been begun by Nerva).

Trajan's Dacian campaigns began in 101AD and continued until successfully completed
in 106AD. Thanks to the treason of a confidant of the Dacian king, Bicilis, the
Romans found Decebalus's treasure in the river of Sargesia/Sargetia - a fortune
estimated by Jerome Carcopino at 165,500 kg of gold and 331,000 kg of silver.
In 107 he devalued the Roman currency. He decreased the silver purity of the denarius
from 93.5% to 89% - the actual silver weight dropping from 3.04 grams to 2.88 grams.
This devaluation, coupled with the  massive amount of gold and silver from Dacia
allowed the Emperor to mint a larger quantity of denarii than his predecessors.
Trajan was also in a position to reduce the amount of wheat necessary to be shipped to
the capital.
The conclusion of the Dacian Wars marked a triumph for Rome and its armies. Trajan
announced 123 days of celebrations throughout the Empire. Dacia's gold mines were
secured and it is estimated that Dacia then contributed 700 million Denarii annually
to the Roman economy, providing finance for Rome's future campaigns and assisting
with the rapid expansion of Roman towns throughout Europe. Under the spell of the
Dacian windfall the government proceeded in the grand manner. The money was not
needed to rebuild Rome. So it was used to establish a great philanthropic fund.
Under this FCA, farmers were allowed to borrow from the government on mortgage
security at 5 percent, which was less than half the rural commercial rate.
The result is a substantial injection of money into the economy, and interest rates
have to rise to keep prices in check, with near zero increase during Trajan's reign.
High tax rates will limit prices and also bring interest rates down quickly, but why
did Trajan debase the currency? He got gold, but not enough silver to keep the
trimetallic currency in balance. Wheat prices suggest modest deflation with
prices in the range  7-9 drachmae except for 112AD, 12 drachmae.

When Trajan began his reign, bank debt - money in the bank available for loan by the
bank - had increased a hundredfold from debt in the reign of Augustus. When Trajan
died in 117AD debt had fallen by two-thirds.



War in the east - Hadrian's U-turn was more than a short-term response to immediate
crisis;  it reflected a slow but irreversible shift in the balance of geopolitical
power at the expense of Rome. The dynamic that had built the empire had exhausted
itself. War was profitable where there were towns, villages and farms; where there
was a large productive peasantry the fruits of whose labour could be plundered in
war and taxed in peace.

Hadrian wrote off uncollectable debt ~ 900M Sesterces, say 250M Denarii. He
determined to remove these from the accounts and begin his reign with a clean slate.
Consequently the records of these debts were publicly burned, an event which,
obviously, gained him public favour. On ascension, there would be money paid to the
army, some 2500 Denarii per soldier is mentioned as a donative. Interest rates were
high, hence taxes raised excess revenue, though at this time mild deflation seemed
to be ongoing. Spending at this time was wasteful, and while there is no mention of
famine or plague, it may not have been far away. The wars in the east and with the
Jews may have reduced the population growth. The taxes boosted the treasury,
allowing later donatives to increase.

Antoninus (138AD -161AD)

Instead of plundering to support his prodigality, he emptied his private treasury
to assist distressed provinces and cities, and everywhere exercised rigid economy.
One highlight during his reign occurred in 148AD, with the nine-hundredth anniversary
of the foundation of Rome being celebrated by the hosting of magnificent games in Rome.
While this increased Antoninus's popularity, the frugal emperor had to debase the
Roman currency. He decreased the silver purity of the denarius from 89% to 83.5%
- the actual silver weight dropping from 2.88 grams to 2.68 grams.

257  Economy / Economics / Re: Learning from Imperial Rome on: December 27, 2013, 03:33:01 PM


After tax collectors were accused of being too harsh to the poor, Nero transferred
collection authority to lower commissioners. Nero banned any magistrate or
procurator from exhibiting public entertainment for fear that the venue was being
used as a method to sway the populace. Additionally, there were many impeachments
and removals of government officials along with arrests for extortion and
corruption. When further complaints arose that the poor were being overly taxed,
Nero attempted to repeal all indirect taxes. The Senate convinced him this action
would bankrupt the public treasury. As a compromise, taxes were cut from
4.5 percent to 2.5 percent. Additionally, secret government tax records were
ordered to become public. To lower  the cost of food imports, merchant ships were
declared tax-exempt.

The economic policy of Nero is a point of debate among scholars. According to
ancient historians, Nero's construction projects were overly extravagant and the
large number of expenditures under Nero left Italy "thoroughly exhausted by
contributions of money" with "the provinces ruined." Modern historians, though,
note that the period was riddled with deflation and that it is likely that Nero's
spending came in the form of public works projects and charity intended to ease
economic troubles.

In 64, Rome burned. Nero enacted a public relief effort as well as significant
reconstruction. A number of other major construction projects occurred in Nero's
late reign. Nero had the marshes of Ostia filled with rubble from the fire.
He erected the large Domus Aurea. In 67, Nero attempted to have a canal dug at
the Isthmus of Corinth. Ancient historians state that these projects and others
exacerbated the drain on the State's budget. The cost to rebuild Rome was immense,
requiring funds the state treasury did not have. Nero devalued the Roman currency
for the first time in the Empire's history. He reduced the weight of the denarius
from 84 per Roman pound to 96 (3.85 grams to 3.35 grams). He also reduced the
silver purity from 99.5% to 93.5% - the silver weight dropping from 3.83 grams to
3.4 grams. Furthermore, Nero reduced the weight of the aureus from 40 per Roman
pound to 45 (8 grams to 7.2 grams). He himself, he said, made the state an annual
present of sixty million sesterces.

Rome, at this time 64AD, is divided into fourteen districts, four of which
remained uninjured, three were levelled to the ground, while in the other seven
were left only a few shattered, half-burnt relics of houses.

The cost of reconstruction is immense, far higher than the economy could easily
absorb without price increases, and there were significant price fluctuations
still ongoing when Nero died in 68AD.

Nero's debasement of the Roman denarius after the great fire of 64AD was mirrored
in the Alexandrian coinage: His last four years witnessed an intense outpouring
of tetradrachms, actually a recoining of the existing currency supply (including
some high-quality Ptolemaic tetradrachms still in circulation) to the new denarius
standard, viz. 2.19 grams of silver per tetradrachm. In this process a considerable
quantity of silver was recovered and exported to Rome, where it enlarged the flood
of denarii minted to finance Nero's building program.


Nero's death precipitated a period of financial and political turmoil. 69AD became
known as the year of the four Emperors, with further damage to the Treasury, and
ceding further political power to the benefit of the Army and the Praetorian Guard.

Fires, floods, plagues, eruptions provided a background that echoed the distress,
and in these succeeding years brought a series of crises and Emperors greater or
indifferent incompetence.  It is really not possible to easily model this scale of
anarchic behaviour. A pattern emerged: the Senate proposed a new Emperor, the Army
accepted him, on accession the Emperor gifted the contents of the Treasury and most
of his personal fortune to the Army: each variant, depending on the integrity of
the new Emperor and the corruption of the old, would begin to rebuild their
finances, either by foul means, or by confiscating the wealth stolen by the previous

((Vespasian(70AD - 79AD) Titus(79AD - 81AD))

Domitian (81AD) attempted to restore the currency, bringing the denarius back to
98 percent silver. A financial crisis soon followed in 85AD and the denarius was
again debased. It is reported that Domitian increased the pay of the army by one
third, and absent a record of donatives on accession, it is assumed that the pay
increase was in lieu of a donativum.

Nerva - All properties which had been confiscated by Domitian were returned to their
respective families. As was custom by this time, a change of emperor was expected to
bring with it a generous payment of gifts and money to the people and the army.
Accordingly, a congiarium of 75 denarii per head was bestowed upon the citizens,
while the soldiers of the Praetorian Guard received a donativum which may have
amounted to as much as 5000 denarii per person. This was followed by a string of
economic reforms intended to alleviate the burden of taxation from the most needy

When Nerva died in 98AD, the government was in another crisis, the banks and
treasury were bankrupt, even after desperate measures including the auctioning of
Domitian's property, including ships, estates, and even furniture.

The records suggest that wheat prices rose from a low of 2.2 drachmae to 16 drachmae
between 65AD and 99AD.
258  Economy / Economics / Re: Learning from Imperial Rome on: December 25, 2013, 09:06:26 PM

Donatives and Congiarium:

Tiberius succeeded Augustus in 14AD, and inherited twentyfive legions, the land rents
and wheat trade of all Egypt, silver mines in Spain, and some problems. There were,
unusually, few potential challengers and Tiberius's accession was bloodless.

Mutiny broke out almost immediately in the German Legions. While some suggest that an
increase in pay was promised by Augustus, it seems more likely that a substantial
donative was expected. A substantial donative would be of the order of three to five
years pay for the Army, thus perhaps 15-20 percent of GDP. That would be within the
gift of Augustus. Army pay was raised by taxation, hence any requests for increases
in pay and hence taxes would empower the landed gentry recently screwed over by Augustus.
In either case Tiberius was not disposed to handing out money, particularly under
duress, and given the past generosity of Augustus there may not have been much money
in the coffers.

Also at this time, Tiberius pressed to have the laws prohibiting usury enforced. If
money was to be borrowed, it was to be loaned at zero interest rates applicable
across the empire whether in Rome, Alexandria, Londinium, or Jerusalem. Tiberius
not only ended the Augustan practice of donatives and circuses, he discouraged
others from carrying on the practice.

To suppress the mutiny, Tiberius sent his son Drusus and his adopted son Germanicus
with their Legions into Germany. Instead of the expected conflict, Germanicus offered
the mutineers a way out: to join him, cross the Rhine and to keep the spoils of the
conquest of the Germans as their payment. Attracted by the prospect of looting, rape,
and pillage, the mutiny ended. The land between the Rhine and the Elbe was retaken,
and Germanicus returned to Rome in triumph after regaining two of the three eagles
lost in 9AD. Power slipped a little further out of the hands of the Senate and into
the reputation of the Army.

Zero interest rates degraded the ability of the monetary system to direct supply to
meet demand and also destroyed the business model of the banks. It took some time,
but the crisis peaked in 32-33AD, when the capitalisation of the Financial Sector
rapidly approached zero. The exact terms are unknown, but Tiberius rescued the
banks with several large loans at zero percent interest rates. It is likely that
Tiberius screwed over the banksters in much the same way that Augustus dealt with
the Senate.

In 31AD Tiberius, with the help of the Senate, suppresses the usurper Sejanus,
bribing the remainder of the Praetorian Guard with a substantial donative. Anyone
remotely connected to Sejanus was executed in a ruthless and brutal purge and their
property was forfeited.

Tiberius died in 37AD, some hours after Caligula publicly announced his death
and while the resulting celebrations were underway.



According to Suetonius, in the first year of Caligula's reign he squandered
the 2,700,000,000 sesterces that Tiberius had amassed.

In any event, Caligula's political payments for support, generosity and
extravagance quickly exhausted the state's treasury and a financial crisis emerged
in AD 39. Caligula began falsely accusing, fining and even killing individuals
for the purpose of seizing their estates. A number of other desperate measures by
Caligula are described by historians. In order to gain funds, Caligula asked the
public to lend the state money. Caligula levied taxes on lawsuits, marriage and
prostitution. Caligula began auctioning the lives of the gladiators at shows.
Wills that left items to Tiberius were reinterpreted to leave the items instead to
Caligula. Centurions who had acquired property via plundering were forced to
turn over spoils to the state. The current and past highway commissioners were
accused of incompetence and embezzlement and forced to repay money.

His nephew Nero Caesar both envied and admired the fact that Gaius had run through
the vast wealth Tiberius had left him in so short a time. The Vatican Obelisk
was first brought from Egypt to Rome by Caligula. It was the centerpiece of a large
racetrack he built. A brief famine of an unknown size occurred, perhaps caused by
this financial crisis, but according to Suetonius a result of Caligula's seizure
of public carriages, according to Seneca because grain imports were disturbed by
Caligula using boats for a pontoon bridge.

There is simply no way that the economy could withstand the instantaneous expenditure
of 700M Denarii. The GDP was a little over 500 million denarii, leaving considerable
doubt over the exact course of events. Interest rates fall because money is easy to
obtain, and to restrain the economy taxes are raised to a level where the economy
would collapse if the pressure were maintained there for more than a couple of years.
Almost all the Treasury's wealth was transferred to the private sector.

Of note is the effect of raising government spending. It seems impossible to raise
government spending sufficiently to justify the taxes raised without pushing
inflation into a steep rising trend. Perhaps a reasonable assumption is that
towards the end of his reign, spending was limited to Army costs, and hence taxation
would fall as soon as the projects were completed and revenues increased.

Perhaps Caligula caused someting similar to a Jubilee to occur as assets were seized
from the wealthy and spent or given to the poor in the form of higher wages.
The heavy taxation, seizures, and tax on food would have caused both unemployment
and price increases. Money would be withdrawn from bank deposts of the private sector,
and either concealed or exported. From about this time until around 70AD-80AD
Egyptian wheat prices rose 53 percent. That is over one percent pa, but legionary
pay and Army costs seem to have been static, perhaps because those related prices
were controlled by the Emperor. In all this, more silver was needed to increase
the quantitiy of denarii in circulation.

Meanwhile, back in the Senate, while Caligula was keeping the mob entertained, the
Senators were increasing their wealth and influence, thus when Caligula mentioned
that he might make his horse a Senator, something had to be done. In 41AD Caligula
was assassinated.

Taxation was some seven percent of GDP, while interest rates were two percent.


Season's compliments to all :-)
259  Economy / Economics / Re: Learning from Imperial Rome on: December 24, 2013, 09:49:21 PM
Hmmm, Catastrophe?  - I'd view any situation where slavery is a preferred lifestyle choice,
as quite serious, but maybe I'm just a 21st century socialist.
I chose "catastrophe" to mean both a serious decline in the quality of life for the general
population and to describe a process that is very difficult to control and to reverse. 
260  Economy / Economics / Re: Learning from Imperial Rome on: December 24, 2013, 09:35:25 PM

Any figure quoted here should be treated with the caution usually reserved for
the output of any computer.

Solid data on most periods of Imperial Rome is somewhat sparse,
hence modelling the economy is more detective story than math.
Fortunately, thanks to ongoing interest in the history of Rome,
there is enough data available to make sensible guesses. This
paper was particularly useful: Prodromidis - Discussion paper Nr 85 - Another View on an Old Inflation - P-I Prodromidis

Although this economic history properly begins in 27BC when Octavian accepts,
as head of state, the name Augustus and rights and responsibilities that were
previously held separately to that office, his actions two years earlier are telling:
In the year 29 BC, Octavius paid 400 sesterces each to 250,000 citizens,
1,000 sesterces each to 120,000 veterans in the colonies, and spent 700 million
sesterces in purchasing land for his soldiers to settle upon. He also used a census
to determine the population and to use this as a base for taxation. Largesse such
as that above had the benefit of encouraging people to be recorded in the census.

Thus after defeating Antony through military skill and might, in 27BC Augustus retained
certain rights to Egypt and other important military provinces. In his acceptance
speech, Augustus declared that he had restored the Republic. Financially,
principally through Egypt, Augustus had an income of perhaps five percent of Roman GDP,
and he spent almost all of that on donatives and public works. The Senate raised taxes,
via a one percent tax on wealth, sufficent to pay the costs of the Army and related
services, perhaps as much as five percent of GDP. The Army comprised 28 legions,
each legionaire was paid 150 denarii pa and the military budget was some 15.652 M Denarii,
suggesting a GDP in excess of 300M Denarii. To pay for this, taxes were levied only
on Roman citizens, hence only applicable to what is now modern Italy. This was
supplemented by tribute from conquered lands, today France, Spain, Greece, part
of Germany, and others.

This Settlement marked the end of a struggle between the propertied classes and the
champions of the common people that continued through most of the first century BC.
Civil wars have a way of extinguishing debt, hence in 27BC, Rome's debt to GDP may
have been as low as ten percent. The Roman coinage was sound: the gold aureus 7.9g;
the silver denarius 3.8g; the Sestertius in orichalum 8.0g, and the bronze As.
Peace brought improvements in tax collection, and less corruption. The population
grew 0.48 percent pa, and productivity increased by 1 percent pa. Prices were quite
stable, though variations year-to-year in crop yields caused wheat prices to fluctuate
around 4.5 drachmae per artaba.

The reign marked a change from military prowess to political and economic skills,
from conquest to consolidation and improvement, from expansion to a fixing of borders
and alliances. Augustus was in sole control over most of the Army, and established
the Praetorian Guard to provide close protection wherever he went. Over time, Augustus
replaced many officials with his own men, giving him tighter control over the
administration. With interest rates of some three percent, and above the rate of growth,
the economy suffered mild inflation during the 44 year reign. Legionaire pay rose
to 224 denarii, suggesting a 50 percent inflation over the 44 years.

Aside from those who opposed him directly on the battlefield, the biggest losers
to Imperial Patronage and public generosity were the Senators who espoused the old
republican order, and the corrupt civil servants who were replaced under the new order.

When Augustus died in 14AD he left a document in his own hand, advising Tiberius to
keep the Empire within the present frontiers. Some five years earlier, in Germany,
three legions were ambushed and annihilated, reducing the number of legions to
twentyfive, and ceding territory between the Rhine and the Elbe.

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